On February 20 the Department of Health and Human Services released the final rule on essential health benefits, actuarial value and accreditation. The final rule largely follows the proposed rule released in November, but also clarified mental health parity requirements, out-of-pocket maximum requirements by market segment and pediatric dental benefits.

Essential Health Benefits

The final rule generally follows the proposed rule, which allowed states to choose a benchmark plan1 for essential benefit plans in 2014 and 2015. Key highlights include:

Habilitative services: The final rule does not expand the definition of habilitative services but gives states the option of defining which habilitative services must be offered. On Jan. 7, 2013, the Michigan Insurance Commissioner issued a bulletin that defined applied behavior analysis services for autism as a habilitative service.

Prescription drugs: Health plan issuers must offer at least one drug in every essential health benefit category and class, or the same number of drugs in each category and class of the benchmark plan.

Mental health: The final rule requires that all new small group and individual market plans cover mental health and substance use disorder services, as well as comply with the federal parity law requirements beginning in 2014.

Non-discrimination: The final rule clarifies that issuers may use factors such as age and family history to manage medical care supported by reasonable and evidence-based treatments.

Out-of-pocket maximum: The final rule clarifies that large group and self-insured coverage must comply with the Affordable Care Act maximum out-of-pocket requirements (estimated for 2014 at $6,400 for self-only coverage and $12,800 for coverage other than self-only).

In a corresponding FAQ issued by HHS and the Department of Labor, and Treasury, the agencies provided a safe harbor for group health plans if the major medical coverage or any carve outs (e.g., prescription drug coverage) do not exceed $6,400. This exception is for one year only.

Pediatric dental: The final rule states that for plans sold off Marketplace, issuers must cover the 10 essential health benefit categories including pediatric dental benefits for small group and individual products. The issuer does not have to provide pediatric dental benefits if an individual purchased standalone dental coverage certified by the Marketplace and meets the essential health benefit requirements. The final rule also clarifies that the Marketplace will determine the reasonable out-of-pocket maximum requirement for standalone dental plans.

Actuarial Value

The final rule largely follows the proposed rule with a few minor changes. The final rule provides flexibility in the small group market by permitting issuers to exceed the annual deductible limits in order to meet and offer coverage at a particular metal level. HHS released the final actuarial value calculator which allows for issuers to input cost-sharing factors to determine the actuarial value of their products. In 2014, the actuarial value calculator uses a national standard population, but for plan years 2015 and after, the rule would allow states to submit state-specific claim data for use in the calculator.

Minimum Value

The minimum value calculator allows for issuers to input information about the plan’s benefits and cost-sharing to determine whether the plan covers 60 percent of the benefit costs as required under the Affordable Care Act. The calculator allows for two-tier plan designs, HRA and HSA contributions, narrow network designs, and separate out-of-pocket maximums for medical and drug.

If the terms of the employer-sponsored plan are consistent with, or more generous than, any one of the safe harbor checklists, the plan would be treated as providing minimum value.

The final rule clarifies, however, that any small group plan that is Affordable Care Act compliant will be considered to meet the 60 percent minimum value standard. It also clarifies that the out-of-pocket limits will apply only to in-network providers.

Proposed Accreditation Standards

HHS finalized the provision in the proposed rule to establish a process for recognizing more accrediting entities besides URAC and NCQA. Additionally, the rule finalized the timeline for plans to become accredited in a federally-facilitated or state partnership Marketplace. The rule requires those QHP issuers whose commercial, Medicaid, or Marketplace products have not been accredited to schedule accreditation in 2013. Issuers do not have to meet full compliance with accreditation guidelines under the Marketplace final rule until the fourth year of QHP certification.

Where can I find more information?

1Each state sets their own benchmark for essential health benefits for on and off Marketplace in individual and small group products. Michigan has chosen Priority’s HMO plan to use as a guidelines for carriers on these benefits.

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.